Margin Trading

Introduction

Securities Margin Financing, or Margin Trading, is about using your stock holdings as collaterals to borrow extra funds and buy additional stocks.

MONEX BOOM's margin financing service is so flexible that accepts listed securities in 5 major markets as collaterals. You can use the financing to freely trade across the 12 markets that MONEX BOOM offers.

Unique Advantages

Wide Coverage

We accepts a broad range of securities as collateral

Effortlessly strengthen your buying power with your holdings in the 5 major stock markets!

Over 18,000 stocks listed in Hong Kong, U.S., Japan, Singapore and Australia markets can be used as collaterals for margin financing.

Highly Flexible

You can trade freely across multiple markets

Margin financing facilities available can be used to buy any securities listed on the 12 markets that MONEX BOOM offers for trading.

Mark-to-market

Fair valuation of collaterals with high transparency

Valuation of collaterals is mark-to-market. Even the collaterals in your portfolio are listed on different markets, the valuation of each collateral will be reflected in real-time in accordance with corresponding trading hours. Our responsive margin calculation can let you closely monitor your margin positions, anytime and anywhere.

Margin Trading FAQs

There is no difference when you place orders with a cash account or a margin account.

However, you can enhance your buying power with margin account, which allows you to borrow money from MONEX BOOM by using your stock holdings as collateral to buy more stocks. The amount you can borrow (i.e. the margin financing facilities or margin value) is calculated based on the market value and the margin ratio of your collaterals.

You are free to use the margin financing facilities granted to you. You can purchase any securities listed on the 12 countries that MONEX BOOM offers for trading, or use it as a source of funds for any other purpose.

You can only borrow the margin loan in Hong Kong dollars and/or U.S. dollars.

Please note that if you buy stock that settled in U.S. dollars while you do not have U.S. dollars in your account, we will lend you U.S. dollars. If you buy stocks that settled in currencies other than U.S. dollars, we will lend you Hong Kong dollars.

For example: You bought some Singapore stocks settled in SGD. You do not have SGD in your account or the SGD is insufficient, MONEX BOOM will lend HKD to cover the shortage in SGD.

Same as cash account, if your margin account does not have sufficient fund in the settlement currency to cover the executed trades, we will arrange currencies conversion to cover the deficit currencies on the next business day.

When we perform the currencies conversion, MONEX BOOM will follow the "Currencies Conversion Sequence" of your MONEX BOOM account. MONEX BOOM will firstly sell the currencies at the top of the sequence, if exhausted, then move down to the next currency.

To define the "Currencies Conversion Sequence", please login to your MONEX BOOM account, then go to the "Currencies Conversion Setting" under "Currencies Conversion" of the "Funds & Account" section.

However, if you want to borrow HKD or USD so that you can keep the cash balance in other currencies, you can change your "Conversion Preference" to "NOT cover the negative cash balances(s) in HKD/USD". Therefore, MONEX BOOM will NOT convert currenc(ies) to cover your HKD or USD deficit in your Margin Account.

Example 1: If you have positive cash balance in AUD but negative in HKD, MONEX BOOM will convert your "surplus" AUD to cover your shortage in HKD. However, if you would like to keep the "surplus" AUD for the coming buy orders on Australian stocks, you can change your "Conversion Preference" to "NOT cover the negative cash balances(s) in HKD/USD". Then, MONEX BOOM will not change your AUD into HKD, but will lend you margin loan in HKD.

Example 2: If you only have positive cash balance in SGD, but the amount is not enough to cover the negative in JPY, MONEX BOOM will convert all your "surplus" balance (i.e. SGD) into JPY. Then, for the remaining balance of JPY in short, MONEX BOOM will follow the "Currencies Conversion Sequence" of your account and lend you either HKD or USD to cover the shortage in JPY.

In addition to letting MONEX BOOM arranges currencies conversion for you, you can give MONEX BOOM any specific instruction to convert a currency to another. You can do it by simply clicking "FX Instructions" on the "Currencies Conversion" page of the "Funds & Account" section.

Margin value is the amount of margin financing facilities available for you. It is a fluctuated amount calculated from the market value and the margin ratio of the marginable stocks you are holding in your margin account (i.e. the collaterals).

In order words, Margin Value = Market Value x Margin Ratio.

Example: You are holding one marginable stock in your portfolio, and its margin ratio is 50%.

Just like placing orders in a cash account, you can directly use the margin value (i.e. available margin financing facilities) in your margin account to buy additional stocks.

For example: There are $20,000 of cash and $18,000 of margin value in your margin account. When you buy $30,000 of a stock, the $20,000 will be paid by cash and $10,000 paid by margin loan lent to you. And you have $8,000 unused margin value remains in the account.

Please note that the margin loan interest will be calculated starting from the settlement day.

Yes. Even you do not have any stock holding in your margin account, you can still enjoy margin financing facilities when you buy any marginable stock. Your buying power to purchase marginable stocks will be enhanced by the respective margin ratio.

For example: When you input an order to buy a marginable stock with 50% margin ratio, say HSBC in Hong Kong, our system will calculate your buying power by doubling your cash balance. That is, if you have HKD 50,000 cash balance, you can input a buy order to buy up to HKD 100,000 worth of HSBC.

When you sell your stocks, the sales proceeds will be used to repay the margin loan. If your sales proceeds are not enough to cover your loan, you might need to transfer funds into your margin account.

MONEX BOOM will charge interest on the margin loan (i.e. any outstanding amount on or after trade settlement day) at H.K. Prime Rate (currently is at 5%) plus 3% p.a. or financing cost plus 3% p.a., whichever is higher, and the interest rate applied is subject to change from time to time.

Interest will only be charged on the margin loan (i.e. any outstanding amount on or after trade settlement day (e.g. settlement-day for Hong Kong market is T+2, i.e. 2 days after "trade date")). The loan interest is calculated on the "due" balance on a daily basis.

[Example 1] Buy stock on margin and take profits one week later, need to pay interests for 7 days.

You have HKD 24,000 of cash in your margin account. You borrow HKD 36,000 to buy HKD 60,000 of Stock Y (Hong Kong stock) on April 1, 2013 (Friday) and sell it to take profit on April 8, 2013 (Friday). MONEX BOOM will start to calculate the margin loan interest on the settlement day of the buy trade, i.e. April 5, 2013 (Tuesday), until the settlement day of the sell trade, i.e. April 12, 2013 (Tuesday).

[Example 2] Buy stock on margin and repay the loan on the settlement day, NO need to pay interests.

You have HKD 50,000 of cash in your margin account. You borrow HKD 20,000 to buy HKD 70,000 of Stock Z (Hong Kong stock) on April 1, 2013 (Friday) and then deposit HKD 20,000 of cash into your account on the settlement day of the buy trade, i.e. April 5, 2013 (Tuesday). As there is no outstanding loan at the end of the settlement day, no interest will be charged from your account.

When the amount you borrowed (i.e. margin loan) is higher than the available amount of margin financing facility (i.e. margin value) in your account, there will be a margin call.

It is generally due to the fall of market price of the marginable stocks (the collaterals) you are holding. When the market value of the collaterals decreases, the margin value of your account will decrease accordingly.

Generally, you have one business day to meet the call. However, this can be shorter in volatile market conditions. MONEX BOOM retains the right to liquidate adequate securities in your margin account in order to meet the margin call requirement.

MONEX BOOM will use its best endeavors to contact you about the margin call. However, you will be held responsible of your account activities at all times and should be aware of your risk exposure when using the margin financing facilities.

Please bear in mind that MONEX BOOM reserves the right to liquidate adequate securities in your margin account in order to meet the margin call requirement.

Last Update: July 2017.

The Risk of Margin Trading

When you trade on margin, you are borrowing money from MONEX BOOM against your existing stock holdings to buy even more stocks. Such power of leverage amplifies the stocks' performance – it makes losses and gains greater than investing strictly on cash-only basis.

Before opening a margin account, it is important to be aware of the features and risks associated with margin trading, especially to understand what will happen if the market prices of your stock holdings decline.

Margin Basics

Margin trading involves significantly higher risks than cash trading.

Margin is essentially investing with borrowed money. You need to repay the loan and the interest incurred.

You may have to deposit additional cash or sell some stocks in your margin account on short notice to cover market losses.

You may be forced to sell some or all of your stock holdings when falling prices reduce the value of your stocks.

If you fail to meet a margin call, MONEX BOOM may sell off some or all of your stock holdings until the required level of collateral is restored or the loan due is completely paid off.

It is possible to lose more money than you have invested. You are responsible for paying any outstanding loan even if your portfolio value has dropped to zero.

You should make a careful assessment on your financial resources, investment objectives, and tolerance for risk, and read the Schedule 1: Margin Trading Supplement of the Client Agreement to fully understand your rights and responsibilities.

Margin Trading Glossary

With a margin account, you can use your stock holdings as collaterals and borrow money from MONEX BOOM to enhance your buying power in trading stocks. You can enjoy the trading flexibility without having to fully pay cash up front.

Buying Power is the maximum value available to you for the purchase of any specific stock. It is calculated based on your Total Fund Available and the margin lending percentage ("margin ratio") of that specific stock you intend to buy.

Margin financing is a standby credit line or a revolving loan facility secured by stock(s) as collateral(s). It is granted to clients by MONEX BOOM to finance the trading activities (including but not limited to buying listed securities) in clients' margin account.

All stocks listed in Hong Kong, U.S. (including NYSE, NYSE MKT, NYSE Arca and NASDAQ), Japan, Singapore and Australia markets can be used as collateral for margin financing, except for warrants, suspended, illiquid and "penny" stocks.

The margin ratio is ranged from 10% to 70% of the market value of the marginable stocks. Different margin ratios are applied to different marginable stocks. Please login and refer to the Marginable Stocks List for details.

Margin value is the amount of margin financing facilities available for you. It is a fluctuated amount calculated from the market value and the margin ratio of the marginable stocks (i.e. the collaterals) you are holding in your margin account.

Margin Loan is the amount of margin financing facilities you used (i.e. the amount you borrowed), indicated as the negative cash balance(s) in your margin account on the settlement-day basis (e.g. settlement-day for Hong Kong market is T+2, i.e. 2 days after "trade date").

Margin loan interest will only be charged on the margin loan (i.e. any outstanding amount on or after trade settlement day). The loan interest is calculated on the "due" balance on a daily basis and is charged to your margin account at the end of the month.

MONEX BOOM will charge interest on the margin loan at H.K. Prime Rate plus 3 % p.a. or financing cost plus 3% p.a., whichever is higher, and the interest rate applied is subject to change from time to time.

There will be a margin call when the margin loan (i.e. the amount you borrowed) is higher than the margin value (i.e. the amount of margin financing facility available) in your margin account.

It is generally due to the fall of market price of the marginable stocks you are holding (i.e. the collaterals). When the market value of the collaterals decreases, the margin value of your account will decrease accordingly.

Note: The list of marginable stocks and respective margin ratio, client's margin limit and margin interest rate are subject to change at the MONEX BOOM's discretion without prior notice.

Monex Boom Securities (H.K.) Limited is licensed by the Securities and Futures Commission (SFC) for Type 1 (dealing in securities), Type 2 (dealing in futures contracts) and Type 7 (providing automated trading services) regulated activity under CE Number AEF808. It is also an exchange participant of The Stock Exchange of Hong Kong (SEHK).